Bill filed could damage Texas craft breweries

Austin brewery owners said a bill filed in Texas could hurt several craft breweries.

Rep. Senfronia Thompson filed House Bill 3389 in Mid-March. The bill would cut the number of barrels a craft brewer can self-distribute to 5,000 a year.

"This year we're going to sell about 10,000 barrels and we're probably self-distributing about 9,000 of that," said Owner of Live Oak Brewing Company Chip McElroy

"5,000 barrels is really not a lot of beer. It's certainly not as much as it used to be in Texas," said Kevin Brand who owns 512 Brewing Company.

The battle between micro-breweries who self-distribute and wholesale distributers has been going on for several years. In fact, last session a bill was passed that limited the number of barrels craft brewers can self-distribute to 40,000.

If legislators drop that number to 5,000 some local breweries would have to pay a wholesale distributer to get their beer into stores.

"I think it would hamper some of the continued growth of businesses like mine. I think it might keep people out of the marketplace and I think it might essentially put some people out of business," said Brand.

"We would go out of business and all these people would lose their jobs," said McElroy.

The United States currently has a three-tier system for alcohol distribution. Producers sell to distributors who then sell to retailers.

Texas, however, allows craft breweries to self-distribute some of their products as a way to grow their business. So why did Rep. Thompson file a bill that would make business more difficult for craft brewers?

In a statement representative Thompson said, "...Trying to find a proper balance in the amount a craft brewery can self-distribute and keeping the spirit of the three-tier system is a challenge. I will continue to support these emerging companies while preserving the three-tier system that has been in place since the repeal of Prohibition."

Thompson's campaign contribution records show two political action committees that could benefit from HB 3389; the Beer Alliance of Texas and the Wholesale Beer Distributors of Texas.

"She's friends with the beer distributers and this has been described as a shot across the bow of what the beer distributors can do," said McElroy.

Local brewers said Thompson has also fought for them in the past and they're hoping this bitter bill will fall flat before it hits the House floor.

House Bill 3389 was referred to the Licensing and Administrative Procedures Committee, but the bill does not have a committee hearing date at this time.

Without a hearing the bill won't ever make it to the House floor.

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